Star Entrepreneur’s Business Advice: Don’t Listen to Me

Zhang Yong, the creator of the wildly popular Chinese hot-pot chain Hai Di Lao, may not have the global cult following of Apple founder Steve Jobs, but in China’s food and beverage industry, he isn’t far behind. In 2011, bookstores stocked the shelves with “Learn from Hai Di Lao.” Media outlets are clawing for an opportunity to interview him, a spokeswoman said.

The question for the entrepreneur—who has built a growing empire of 75 restaurants that serve sliced lamb, beef and vegetables to be boiled in spicy broth—is always, What’s next? And how did he come up with the idea to distinguish his chain with service perks like manicures, board games and noodle performances?

Mr. Zhang, who confesses that after 20 years of eating hot pot he doesn’t particularly like it, said he plans to take Hai Di Lao public, but isn’t sure in which market. The timing isn’t optimal right now, he adds, noting that other Chinese companies have listed and flopped almost instantaneously.

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“I’m from the countryside, where rural people believe that if you take money from other people and you don’t bring benefit to them, then you are a liar,” Mr. Zhang said, saying he’ll list Hai Di Lao when the business model can be profitable and more easily replicated.

Hai Di Lao pulled in a 10% profit on 3.127 billion yuan ($510 million) in revenue in 2012, up 54% from a year earlier.

The native of China’s southwestern Sichuan province is eager to expand overseas—and has already begun, opening an outlet in Singapore last year. This September, it’ll be the U.S.

But Mr. Zhang said not to expect a sweeping overseas effort: He’s opening just the one restaurant in Los Angeles and at the moment doesn’t have plans to for more in Singapore.

“It’s not about expanding quickly,” he said, adding, “I want to understand the market.”

Back in China, Mr. Zhang, who says he detests reading management books, said one of the most important aspects of his job is letting employees run the business. Many of the service ideas that have made Hai Di Lao so popular in China, like providing plastic bags for phones (lest they land unprotected in the broth) and hair bands to long-haired girls (lest their hair do likewise), actually came from his employees, he said.

“Not all of these ideas were mine,” Mr. Zhang said. “If you want creativity, you have to let your workers invent and use their creations.”

Still, the 43-year-old entrepreneur has his own brainstorms and has a sincere passion for technology, which is part of the reason that last year he rolled out cyber dining, connecting diners in Shanghai and Beijing through the Internet and flat screens. “I’d put robots in every restaurant if I could,” he said.

But ask Mr. Zhang how others can follow in his success as one of China’s most renowned restaurant owners and he will say, “Don’t study me; learn from Steve Jobs.”

—Laurie Burkitt

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